Europe’s top hubs grab growing share of invested capitalSLUSH & ATOMICO | State of Technology in Europe42Top 5 European hubs versus overall capital invested in Europe*• Top 5 hubs represent an all-time-highshare of total European funding at ~47%• Both Top 5 investment hubs and rest ofEurope growing annually in $ valueinvested• Signs that a winner-takes-most dynamicis emerging at the geographic level, wherethe leading hubs capture a growing shareof overall capital invested in the regionCapital invested as % of total in Europe in periodNote: Top 5 hubs based on European cities with the largest sum of total invested capital in 2015 YTDSource: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 201530.2%46.8%69.8%53.2%2015 YTD2011Rest of Europe London + Stockholm + Berlin + Paris + MoscowNovember 2015#whatsnext4eutech

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Achievement unlocked. But not mission
accomplished. 4 SLUSH & ATOMICO | The State of European Tech November 2015 Like successful companies, successful ecosystems go through distinct stages – and 2015 has been a breakthrough year for Europe. 5 years ago, major questions remained. Could Europe give birth to companies with real scale? Could it produce enough talent and overcome the cultural barriers to entrepreneurship? Could it attract signiﬁcant VC funding - and would the IPOs ever come? Based on one of the most comprehensive studies ever undertaken into European tech, 2015 has conclusively answered these questions with a series of milestones: • 10 European software companies reaching billion-dollar valuations (making a total of 35 since 2003) • on track for more than $10B invested in European tech startups • over 5,000 active angel investors • 1.6m professional developers • ...and over 100 tech IPOs in the last ﬁve years Achievement unlocked. But not mission accomplished. The next stage will bring its own challenges. How do we produce companies valued in the tens or hundreds of billions? How do we bridge the late stage funding gap? How do we unlock our potential by bringing our hubs closer together, and overcoming an alarming gender imbalance? By addressing these challenges, can Europe create an ecosystem self-sustaining enough to weather any future economic shocks? By setting out where we are today in an unprecedented level of detail, we hope this study also helps to show the way to what’s next. Niklas Zennstöm Founder and CEO Atomico Riku Mäkelä CEO Slush Source: Atomico, CrunchBase, Angel List, Stack Overﬂow Developer Insights, CapitalIQ #whatsnext4eutech

Atomico and Slush 5 SLUSH
& ATOMICO | The State of European Tech Atomico is an international investment ﬁrm, focused on helping the world’s most disruptive technology companies scale and become global leaders. Founded in 2006 by Niklas Zennström, a co-founder of Skype, Atomico has made over 50 investments across four continents. Slush is a not-for-proﬁt technology and startup event, organized annually in Finland, Japan and China. In 2015, the Slush event in Helsinki drew together 15,000 entrepreneurs, investors and journalists from close to 100 countries. The mission of Slush is to encourage the next generation of brilliant minds to become entrepreneurs, and to catalyze tech communities across the globe. November 2015#whatsnext4eutech

Our data partners SLUSH &
ATOMICO | The State of European Tech6 Stack Overﬂow is one of the smartest and most helpful corners of the Internet. It’s the place where millions of developers go to learn, share their knowledge, and advance their careers. With nearly 30 million monthly visitors and 10.2 million programming questions, Stack Overﬂow has unparalleled insights into how developers think, what matters to them and what gets them excited. Stack Overﬂow's Developer Insights team works with employers around the world to help them understand regional and localised distribution of technical talent and provides consultancy services around attracting and engaging with programmers. CrunchBase is the leading platform used by millions of entrepreneurs, investors, and analysts looking to discover innovative companies and the people behind them. Founded in 2007 by Mike Arrington, it began as a simple database to track startups covered on TechCrunch. Today, CrunchBase delivers market insights to millions of users and businesses around the world. The CrunchBase Dataset is constantly expanding through contributions from its community of users, investment ﬁrms, and network of global partners. CrunchBase accelerates innovation by bringing together data on companies and the people behind them. For more information, please visit www.crunchbase.com. Meetup is a global network of local communities, built by ordinary people around the things they care about the most. Using the Meetup app or website, you can ﬁnd people in your town who are into the same things you are, and build a real community around that interest. There are currently 24 million members in over 200,000 Meetups in over 180 countries. Meetup believes that people can change their personal world, or the whole world, by organizing themselves into groups that are powerful enough to make a diﬀerence. Glassdoor is the most transparent jobs and recruiting marketplace that is changing how people search for jobs and how companies recruit top talent. Glassdoor combines free and anonymous reviews, ratings and salary content with job listings to help job seekers ﬁnd the best jobs and address critical questions that come up during the job search, application, interview and negotiation phases of employment. For employers, Glassdoor oﬀers recruiting and employer branding solutions to help attract high-quality candidates at a fraction of the cost of other channels. Glassdoor, which has over 10m reviews, salaries and other types of content across more than 190 countries, operates one of the most popular job apps on iOS and Android. The company launched in 2008 and has raised approximately $160 million from Google Capital, Tiger Global, Benchmark, Battery Ventures, Sutter Hill Ventures, DAG Ventures, Dragoneer Investment Group, and others. November 2015#whatsnext4eutech

Survey and opinion formers 7
SLUSH & ATOMICO | The State of European Tech When it comes to the state of European tech, facts and ﬁgures can only get you so far. They can help you identify how much is being raised and where the investments are going but they cannot help you analyse how people are feeling, how conﬁdent they are and whether their mindsets have changed. These are all important questions and so we decided to supplement our fact-ﬁnding analysis with a survey of entrepreneurs, investors and other tech stakeholders. In October 2015, we sent out the survey to people in our European network and received over 800 responses from people with a direct interest in European tech. We have incorporated the ﬁndings into this report. See Appendix for more details. To provide additional context we also interviewed some of Europe’s leading entrepreneurs and investors and you will ﬁnd their insights throughout. November 2015#whatsnext4eutech

Europeans embrace entrepreneurship as a
culturally acceptable career choice as it ﬁnally passes the “parent test” SLUSH & ATOMICO | The State of European Tech9 Statement: It is culturally acceptable in Europe to be an entrepreneur Founders and investors agree…* …as do employees of startups and other businesses* The future looks bright for students… …and for young people in general Strongly agreeStongly disagree I don’t know 49% Disagree 5% 0% Agree 14% 33% 27% 35-44 18% 41% 14% 18-2445-54 25-34 34% 55+ 13% I don’t knowDisagree 17% 10% 10% 80% 70% Agree Founders Investors 8% 80% Agree 75% 9% I don’t know 14%11%11% 78% Disagree 14% Public sector Startup employees Corporate employees “I strongly agree”, by age group * Note: Strongly disagree and disagree, and strongly agree and agree have been added together Source: Slush & Atomico Survey Student respondents only November 2015#whatsnext4eutech

Entrepreneurship is now attracting the
brightest minds from corporate careers and education SLUSH & ATOMICO | The State of European Tech10 Q: What were you doing immediately before you founded your company? (founders only) 18% 47% 6% 28% Working for a company that wasn’t a startup Studying Working for another startup Other Source: Slush & Atomico Survey “I think what has happened is that the brightest of the brightest are no longer choosing banking or consulting as their default profession. Being an entrepreneur is now up there as a preferred choice.” Brent Hoberman, Founders Forum “What we have seen, is that people tend to go from working at a safe company like Ericsson, to actually trying to experience the life of working for a startup. But this wasn’t the case 5 years ago – back then you were insane if you joined a startup. That has deﬁnitely changed.” Alan Mamedi, Truecaller November 2015#whatsnext4eutech

Europe’s founder base is now
stacked with repeat entrepreneurs SLUSH & ATOMICO | The State of European Tech11 Q: Is your current company the ﬁrst company you started? (founders only) 38% ﬁrst-time founders 62% repeat founders Source: Slush & Atomico Survey “There is an increasing number of serial entrepreneurs and for example we have three cases in which we have already invested in an entrepreneur’s ﬁrst and second company. There is an increasing amount of ambitious entrepreneurs who already master startup fundamentals.” Petteri Koponen, Lifeline Ventures November 2015#whatsnext4eutech

Statement: I would rather take
risks and fail than choose the safe option European founders are not afraid of failure… SLUSH & ATOMICO | The State of European Tech12 8% 16% 4%3% Disagree Agree 76% 89% 76% 16% 20% 75% I don’t know 8% 9% Startup employeesFounders AllInvestors Note: Strongly disagree and disagree, and strongly agree and agree have been added together Source: Slush & Atomico Survey “Being an entrepreneur is now a viable career choice. People are ready to take risks and are just going oﬀ and starting companies.” Christian Hernandez, White Star Capital November 2015#whatsnext4eutech

… and although most think
big and long-term, there is still some short-term orientation SLUSH & ATOMICO | The State of European Tech13 Q: What are your goals for your startup? Most founders are thinking really big and long-term… …but some are still focused on Europe or the next milestone 158 responses “world domination” “grow and conquer the world” “change an industry and create mindblowing things” “become a global leader, a deﬁning company for our sector” “become a monopoly in our ﬁeld” “building a sustainable company that takes an entire industry upside down empowered by technology” 73 responses “50 employees and 5M€ revenue by end 2017, present physically in 5 countries” “build a successful internet ﬁrm employing 5-10 people or exit in a year's time” “getting funding” “grow bootstrapped, then exit after we've grown to the right size” “make €1m this year” “raise capital and visibility” “selling it in the next 2 years” Source: Slush & Atomico Survey November 2015#whatsnext4eutech

European founders have global ambitions,
but many focus on their domestic market ﬁrst before thinking of international expansion SLUSH & ATOMICO | The State of European Tech14 43% "Entrepreneurs mostly think and act with a domestic mindset" 46% 9% "Entrepreneurs always think and act with a global mindset" 36% 44% "Entrepreneurs mostly think and act with a global mindset" 3% "Entrepreneurs think and act domestically, but have some international ambitions" "Entrepreneurs only think and act with a domestic mindset” 10% 1% 8% 0% Investors Founders • Many European founders will focus on their domestic market and nearby markets ﬁrst, before thinking about going global • While almost no founders or investors believe European entrepreneurs think only domestically, there is still room to improve the global mindset of Europe’s entrepreneurs Q: How would you describe the international mindset of European entrepreneurs? Source: Slush & Atomico Survey “I think today every industry is thinking more and more global. Just in the past ﬁve years there’s been a huge perception shift. The advice I would give to the next generation of entrepreneurs is to think big, think global. You should have goals set immediately, even though reaching them could take a long time. Let’s put it this way: if you have your goals set on a level that makes you slightly uncomfortable, you’ve probably set them right.” Petri Järvilehto, Seriously November 2015#whatsnext4eutech

International expansion is key to
achieving billion-dollar success… SLUSH & ATOMICO | The State of European Tech15 It’s incredibly rare to build a domestic $B ﬁrm in Europe… …so startups from small markets must internationalise faster 96% 19% 77% 81% 23% 4% USAsiaEurope • International expansion is faster when you come from a small market - averaging just 1.4 years for companies with a domestic population of less than 50m, less than half the time of companies from countries with a population of over 50m people • This is critical to success - every company from a country with less than 50m population went international before hitting a billion-dollar valuation InternationalDomestic only % of $B+ companies that scaled internationally to reach $B+ valuation Time to international expansion in years, by home market population 3.3 2.9 1.4 150m+50-150mUnder 50m Source: Atomico November 2015#whatsnext4eutech "We’re seeing that no matter where companies start out, the great ones can scale internationally faster than before and disrupt established players anywhere in the world. Every company from a country with less than 50m people went international before reaching a billion-dollar valuation." Carolina Brochado, Atomico

Share of non-native employees in
founders’ companies …fortunately, most European startups are born with a native international mindset and an inherent competitive advantage SLUSH & ATOMICO | The State of European Tech16 Many European startups start with an international blend… ...and become even more internationally diverse as they grow 0-25% 15% 58% 26-50% 12% 50-75% 76-100% 15% 56% NativeNon-native 44% Source: Slush & Atomico Survey Q: What percentage (%) of your employees are not native to the country where your company is based? “Today we have a very diverse team - about 40 nationalities. And we have kept this strategy as it’s been helpful for scaling the company around the world - it’s been much faster because we have the in-house knowledge of these markets. For example, when we scaled into India, Alan and I had never been there, and the same goes for Lebanon. And these have now become key markets for our growth - so it’s really helpful to have an international employee base.” Alan Mamedi & Nami Zarringhalam, Truecaller November 2015#whatsnext4eutech

Brent Hoberman, Founders Forum “European
entrepreneurs instinctively know that their domestic markets are too small so they take it internationally from much earlier on. As a result, Europeans often have to deal with multidimensional complexity much earlier on than American entrepreneurs.” In their own words SLUSH & ATOMICO | The State of European Tech17 Brynne Herbert, MOVE Guides “The decision to start MOVE Guides in London has always been about 3 things: time zone, connectivity, and talent. On talent, London gives me and MOVE Guides a diversity of perspective. London is a natural melting pot of people from across Europe and from other countries. We feel very strongly that it brings unique perspective into the company and fosters innovation. It provides diversity in teams, which gives a lot of diﬀerent beneﬁts to the organization. At MOVE Guides, we have about 30 diﬀerent nationalities on our team today, and it's absolutely contributed to many of the pieces of innovation that we've fostered, and also, is a big part of our culture.” Daniel Ek, Spotify “I just had this itch, I wanted to ﬁx a problem. And because this was something that people in all countries face, I had to take a global approach in order to ﬁx it.” Source: Atomico & Slush Interviews November 2015#whatsnext4eutech

…and there are also dozens
of hubs with fast-growing tech communities emerging across the continent SLUSH & ATOMICO | The State of European Tech21 Top 15 fastest-growing hubs by number of tech-related Meetup communities* Annual growth +125% +108% +106% +97% +89% +78% +76% +72% +72% +71% +70% +65% +65%+93% +74% 3642 1712 23 5963 1213121717131217 98 115 49 35 68 175 191 374143 6366 5552 86 Lisbon Hamburg Copenhagen Istanbul Lyon Bucharest Prague Zagreb Munich Madrid Moscow Ljubljana Cologne Stuttgart Frankfurt 2013 2015 YTD # of tech-related Meetup groups by city Source: * Based on all hubs that had at least 10 active tech-related Meetup groups in 2013. YTD up to October 2015. “We are already seeing a change in attitudes and it is pretty amazing. We are seeing that people don’t just want to work in a start-up, but want to create a start-up. In 2012 this was unheard of, so this has all happened in just three years in Lisbon. It’s crazy exponential change for the better in Portugal” Anthony Douglas, Hole19 November 2015#whatsnext4eutech

Europe is building a strong
base of mentors and every success story is helping create a new pool of role models for the next generation SLUSH & ATOMICO | The State of European Tech22 Statement: I am able to turn to supportive mentors to help me when I face a challenge in growing my business 24% 20% 15% 5% 36% Strongly agreeAgree 30% 11% 14% 41% 23% 28% I don’t know 20% Disagree 22% Strong disagree 6% 4% All founders Repeat founders First-time founders Source: Slush & Atomico Survey “In my ﬁrst ﬁve years I got really poor advice, and I just hate the fact that there may be talented people out there with the opportunity to grow a global business, receiving poor advice too. That is why I am more than happy to give advice to others. It feels like the right thing, and of course it gives me energy as well. I get a lot of energy from meeting these people that are ten years younger than me and are doing something really cool and new and fresh and they're not suﬀering from the challenges you have as a larger company.” Sebastian Siemiatkowski, Klarna November 2015#whatsnext4eutech

Founders now believe they can
build their companies from Europe SLUSH & ATOMICO | The State of European Tech24 Q: If you were to start over, where would you choose to found and build your company? 7% 17%A diﬀerent European city I would choose to stay where we are now 62% A diﬀerent US city 2%Elsewhere 12%Bay Area/Silicon Valley Source: Slush & Atomico Survey “I declined an oﬀer from a US investor, because it came with the caveat of "move to the US and we’ll invest". I said "ok then we’re done". It doesn’t make sense for us to move to the US because we’ve proven we can build something out of Lisbon. It's unnecessary to pay 5 or 10x, to signiﬁcantly increase my burn to do the same thing somewhere else when we have the talent and know-how to build product locally. We may need some biz dev here and there, but we can think global and act local out of Lisbon.” Anthony Douglas, Hole19 November 2015#whatsnext4eutech

Startups enjoy major beneﬁts from
being located in Europe’s leading hubs, but there is still little interconnectivity between them SLUSH & ATOMICO | The State of European Tech25 11% 70% 20% 69% No real diﬀerenceDisadvantages outweigh advantages 22% 71% Advantages outweigh disadvantages 9% 18% 8% 41% 54% 37% 46% Emerging links 8% Weak links 57% 46% Strong links 4% 7% AllFoundersInvestorsAllFoundersInvestors Importance of tech hubs and interconnectivity Q: Do you think it is important for a company's HQ to be located in a major European tech hub? Q: How would you describe the degree of interconnectivity between Europe's diﬀerent tech hubs? Source: Slush & Atomico Survey “Apart from personal relationships that founders have with friends, there's no exchange going on at all. For example, people from London are not systematically coming to Berlin or Stockholm or wherever to exchange knowledge. At best they may pop in for a coﬀee when they happen to pass through but there is no structure. It is a huge responsibility that falls back to the VCs and the people that fund companies across the region because they have the key network and they are the link between the companies.” Florian Meissner, EyeEm November 2015#whatsnext4eutech

Sebastian Siemiatkowski, Klarna “Today, if
you’re really talented and you reach out, you could instantly get quite good backing from mentoring and advice on money and so forth - and this did not exist ten years ago. That has deﬁnitely changed. It’s still harder if you’re in Poland; it’s easier if you’re in Berlin or in Stockholm.” In their own words SLUSH & ATOMICO | The State of European Tech26 Christian Hernandez, White Star Capital “There are a whole set of European companies today that actually will produce signiﬁcant wealth, which can then permeate back into the ecosystem as role models the people will aspire to follow. We will then see the kind of momentum that leads LPs to want to bet more actively in Europe and provide more supply and capital at the later stages where we’re still lacking.” Anthony Douglas, Hole19 “Lisbon’s changed, I’m considered one of the “old school” guys as I started before people even knew what the word start-up was in Lisbon in 2011/2012. Then Startup Lisboa brought the ﬁrst wave of entrepreneurs together into one place. Two or three years later and Web Summit is coming to Lisbon, we’ve got Portuguese startups like Codacy actually winning the Web Summit, we’ve got companies like Talkdesk & Uniplaces raising huge rounds, etc. A lot of young people are actually seeking out advice from some of the "older" guys. We’re giving advice to the younger entrepreneurs, and even the older ones who are quitting their jobs to start their own companies - they’re not making the same mistakes that we made. I pride myself on that, as I made every single mistake, and giving some of this knowledge back to the community is really important for the ecosystem to thrive.” Florian Meissner, EyeEm “When I started I was completely wet behind my ears, and I dived into a very early stage of Berlin start-up. There simply weren’t a lot of people back then who you could look up to or ask for advice. That started to change shortly after I came back. There were a couple of people starting companies at the same time. Some failed, and some of us survived, but now there is a tight- knit community of founders that have emerged from that ﬁeld and we're now very close friends. Some of us started investing on our own, and some of us actually still run companies but most of us are acting as mentors to others. This is not unique to Berlin. I think a number of cities in Europe have their own cohort” November 2015#whatsnext4eutech

European talent exists, you just
have to know where to ﬁnd it SLUSH & ATOMICO | The State of European Tech28 50% Q: How would you rate the general availability of European engineering talent? Q: How would you rate the general quality of European engineering talent? 39% 20% Good pool of talent 40% 18% 10% Very good pool of talent 40% Severe lack of talent 0%1% 16% 18% 1% 15% 26% 31% 25% Lack of talent Adequate pool of talent Founders Investors All 10% 40% 11% Higher quality than other regions 42% 39% 7% Much higher quality than other regions 1% Much lower quality than other regions 0% 0% 4% Lower quality than other regions 4% On a par with other regions 3% 43% 46% 50% Investors AllFounders Availability and quality of talent in Europe Source: Slush & Atomico Survey • 57% of all respondents think there is good or very good availability of European engineering talent • Founders are most positive, with 60% believing there is at least a good pool of talent • The quality of talent that is available in Europe is perceived to be at least on a par with other regions and many believe it to be better • Only 4% of all respondents think the European talent pool is lower quality than other regions November 2015#whatsnext4eutech

Europe’s key hubs are building
a critical mass of developers… SLUSH & ATOMICO | The State of European Tech29 # of professional developers per hub and density of professional full-stack developers per country – data from Stack Overﬂow Developer Insights 3.50.2 Full-stack developers per ,000 people 38,194 Moscow 22,944 Istanbul 9,990 Lisbon 27,333 Madrid 71,497 London 40,538 Paris 15,915 Berlin 11,346 Stockholm9,586 Oslo Source: London, Europe’s largest developer hub, has 71,497 professional developers compared to 83,262 in San Francisco According to Stack Overﬂow Developer Insights, there are 1.6M professional developers in Europe today November 2015#whatsnext4eutech

…and, importantly, a large pool
of mobile developers SLUSH & ATOMICO | The State of European Tech30 # of professional mobile developers per country – data from Stack Overﬂow Developer Insights Source: “There is a huge opportunity for entrepreneurs focusing on mobile technology. Europe's population of mobile developers is now larger than that of the USA - in fact, European startups have access to more than 50,000 mobile specialists than their American counterparts” Dimitar Stanimiroﬀ, Stack Overﬂow Developer Insights • The UK has the largest professional mobile developer pool, but there are growing hubs of talent emerging across the whole region, including in places such as Poland and Turkey. • The Nordic region is an emerging hub for mobile development within Europe, and is home to 9% of the region's mobile developers. Sweden has over 7,000 mobile developers; almost half of whom reside in Stockholm. 4,0474,1964,7395,2187,6257,7158,75210,40210,87914,49214,89817,74018,488 31,25132,525 Russia Spain Poland Turkey UnitedKingdom Europe UnitedStates Germany Italy France 237,437 186,602 Netherlands Ukraine Switzerland Austria Romania Belgium Sweden Professional mobile developers November 2015#whatsnext4eutech

Europe is also nurturing a
strong talent pipeline for the future SLUSH & ATOMICO | The State of European Tech31 +600.000 / y US 0.5m 1.1m Europe Europe 9.7m US 4.5m +5.2m Europe produces 2x more STEM grads per year than the US… …and the cumulative diﬀerence over 10 years is >5m grads STEM grads per year STEM grads over past ten years STEM = Science, Technology, Engineering, Mathematics Source: Eurostat “You’ve got some of the top universities in the world in Europe. You no longer have to go to Stanford or Harvard or MIT to get great engineering talent. You can now go to Imperial, Cambridge in the UK or ETH in Zurich or the Max Planck Institutes in Germany or École Polytechnique in France.” Brent Hoberman, Founders Forum November 2015#whatsnext4eutech

But tech entrepreneurship still has
an alarming gender imbalance 11% 89% SLUSH & ATOMICO | The State of European Tech32 Q: What is your gender? (founders only) “We’ve seen the share of female attendees at Slush grow from 5% to 25% in just a few years, but amongst founders the change is painfully slow.” Riku Mäkelä, Slush Source: Slush & Atomico Survey November 2015#whatsnext4eutech

Building a world-class leadership team
in Europe is viable… SLUSH & ATOMICO | The State of European Tech34 50% 37% Disagree I don’t know Strongly agree 6% 4% Agree 2% Strongly disagree 36% 6% 1% 12% 44% 13% 7% 41% 2% 37% Investors All respondents Founders • Of all respondents, 80% agree that it is possible to build a world-class leadership team in Europe • Over a third of respondents strongly agree with the statement, with an even response rate from both founders and investors Statement: It is possible to ﬁnd talent to build a world-class startup leadership team in Europe Source: Slush & Atomico Survey November 2015#whatsnext4eutech

…but it involves competing in
a global war for top executive talent SLUSH & ATOMICO | The State of European Tech35 Source: Atomico & Slush Interviews Sebastian Siemiatkowski, Klarna “The problem is I now need senior executives that have experience of working in a company that has grown from a couple of hundred million dollars in revenue to a couple of billion dollars in revenue. These types of people are rare in Sweden. It is hard to ﬁnd senior executives to help grow from a small to a medium sized and then to a really huge international company and to encourage the talent to move here. I’m competing with PayPal now. I need to be able to hire the same people they hire.” Florian Meissner, EyeEm “The signs are there that the top global executive talent is ready to join European tech companies but it is not easy; it really takes a huge eﬀort. If you are only looking at Berlin or London for the right people you are not thinking big enough. You have to think of the biggest ﬁsh in the world and then you need to try and poach them. That is the mindset you have to have. You should not be aiming to hire from the small business round the corner but the global leader in your ﬁeld.” November 2015#whatsnext4eutech

European countries are introducing programmes
to attract overseas talent, but more can always be done to turn a trickle into a ﬂow SLUSH & ATOMICO | The State of European Tech36 Country Name of Programme Year Introduced Guidelines UK UK Tier 1 Entrepeneurship Visa 2008 3-Year Residency Permit (except for Prospective which is 6 months), Requirement of Maintenance varies Ireland Start-up Entrepeneur Programme 2010 2-Year Residency Permit, Renewable for 3 additional years, Requirement of €75,000 Italy Startup Law 2012 1-Year Residency Permit, Requirement of €50,000 Spain Ley de Emprendedores (Entrepeneur's Act) 2013 2-Year Residency Permit, Renewable for 3 additional years, Requirement of €75,000 Denmark Start-up Denmark 2015 2-Year Residency Permit, Renewable for 3 additional years, Requirement of €17,500 Netherlands Ambitious Entrepreneurship 2015 1-Year Residency Permit France French Tech Ticket 2015 Prize Money of €12,500 (Renewable at end of 6-month program), Residency Permit Fast-Track, Residency Permit of 6 years Source: Government websites, Tech.eu "I think in general, there are a lot of non-native founders in the UK. There are a lot of people who found companies and grow them and have particular risk tolerance who are also immigrants and I think there is a correlation. I think the immigration system in the UK has - up until now - been a competitive advantage. Eileen Burbridge, Sherry Coutu and Sean Park are all immigrants who have been welcomed and have driven innovation. Listening to the current immigration debate I worry that these beneﬁts are at risk“ Brynne Herbert, MOVE Guides November 2015#whatsnext4eutech

In their own words SLUSH
& ATOMICO | The State of European Tech37 Source: Atomico & Slush Interviews Petri Järvilehto, Seriously “About half of our development team in Helsinki is from outside of Finland. It’s quite easy to recruit from within Europe, and especially in gaming there’s been a shift where you have people from other industries hopping over to gaming. It used to be the other way around: game developers had dreams of making movies one day, but today you have Oscar winners in gaming companies.” Anthony Douglas, Hole19 “One of the reasons why Lisbon is great is that we have access to great talent, particularly in design and development; we also have really talented engineers from the major technical universities, like the Superior Technical Institute here in Lisbon. We usually hire graduates straight out of the Institute, we work closely with those guys.” Ilkka Paananen, Supercell “With regards to talent, there’s still a bit of friction but even that is slowly getting better. In the gaming industry, many talented developers are a little older which means they have families. In this sense, Finland has a few big advantages such as the world’s best elementary school system that has gotten a lot of praise in global PISA studies in recent years. Many people want to raise their kids here because of that.” Dimitar Stanimiroﬀ, Stack Overﬂow Developer Insights “For years it's been said that 'the European startup scene is up and coming'. Our technology has identiﬁed over 1.6m professional developers in the region, proving that startups now have access to a pool of technical talent that's even larger than the US. Forget up and coming, it's all happening now.” November 2015#whatsnext4eutech

Capital is ﬂooding into Europe
Total # of rounds up 2.5x in three years… • Total deal volume has more than doubled in Europe in the past ﬁve years • 2014 saw the record year for deal volume, but 2015 has seen a slowdown so far this year …and $ value growing rapidly • Since 2014, Europe has seen increased late-stage funding contributing to signiﬁcant $ amount growth in invested capital • A large share of capital has been invested by non-European funds that have increasingly recognised Europe’s potential SLUSH & ATOMICO | The State of European Tech39 Deal volume and value across Europe* 1,976 3,011 2,601 1,785 1,274 20132012 2015 YTD2011 2014 +33.2% 2015 YTD2012 2014 4.6 7.1 2013 4.8 +23.5% 9.4 3.8 2011 Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 US$B invested# of deals November 2015#whatsnext4eutech

Europe’s top hubs grab growing
share of invested capital SLUSH & ATOMICO | State of Technology in Europe42 Top 5 European hubs versus overall capital invested in Europe* • Top 5 hubs represent an all-time-high share of total European funding at ~47% • Both Top 5 investment hubs and rest of Europe growing annually in $ value invested • Signs that a winner-takes-most dynamic is emerging at the geographic level, where the leading hubs capture a growing share of overall capital invested in the region Capital invested as % of total in Europe in period Note: Top 5 hubs based on European cities with the largest sum of total invested capital in 2015 YTD Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 30.2% 46.8% 69.8% 53.2% 2015 YTD2011 Rest of Europe London + Stockholm + Berlin + Paris + Moscow November 2015#whatsnext4eutech

Europe is witnessing the rise
of entrepreneur-led investing Founder-funder angel investment transactions per year1 # of startups funded by entrepreneur-led VCs per year2 SLUSH & ATOMICO | The State of European Tech43 Founder-funder transactions per year and # of European startups funded by entrepreneur-led VCs* Note 1: Unique investments into European companies by European angel investors that have previously founded and built their own European technology company. One round per investor per company included only. Excludes founders that have founded institutional VCs. Note 2: Number of European technology companies funded by entrepreneur-led European institutional VC funds. Includes any fund where at least one of the Founding Partners of the fund has previously founded and built a European technology company. Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 173174 150 88 145 48 193 2014 2015 YTD201320122011 Projection for 2015 142 113 88 80 111 37 Projection for 2015 2013 2014 148 2015 YTD20122011 “It's easier to start a company than ever, but scaling to become a global winner is still very hard. We know what that feels like as an entrepreneur, and we learned a lot of lessons from scaling Skype about what to do and what not to do. Rather than trying to create one more successful company, we thought we could have more impact by helping an entire generation of European founders build the Skypes of tomorrow.” Niklas Zennström, Atomico # of startups# of deals November 2015#whatsnext4eutech

Europe’s leading hubs are building
strong pools of angel investors SLUSH & ATOMICO | The State of European Tech44 Active angel investors per city 5456748892 124130147153161168 196 250 270 325 383 420 Oslo Brussels Hamburg Copenhagen Munich Madrid Vienna Zurich Dublin Stockholm Berlin Barcelona London 2.125 Moscow Amsterdam Helsinki Paris Istanbul Angels per ’000 people 0,25 0,19 0,11 0,54 0,02 0,02 0,25 0,10 0,05 0,19 0,11 0,34 0,24 0,16 0,05 0,04 0,32 0,09 Source: Angel List, FiBAN Europe now has over 5,000 active angel investors resident in the region’s top hubs, according to Angel List “Successful entrepreneurs are now taking the time, sitting down with startups, mentoring them and many are acting as business angels. There's a whole shift of mentality amongst entrepreneurs with people thinking globally and wanting to create huge businesses. And now the angel money is deﬁnitely there to support them and there are a number of good mentors that can give proper advice, as well as seed capital. This just didn’t exist when we started Klarna ten years ago” Sebastian Siemiatkowski, Klarna November 2015#whatsnext4eutech

European and international corporates are
increasingly active in Europe SLUSH & ATOMICO | The State of European Tech46 Selected corporate investors with dedicated European tech VC focus Source: Company press releases Salesforce Ventures Announced: 2015 Fund size: $100M / year "There is so much incredible innovation happening in Europe today. Our $100 million commitment strengthens our mission to help startups grow and give back to their communities.” Google Ventures Announced : 2014 Fund size: $125M / year “We believe Europe’s startup scene has enormous potential. We’ve seen compelling new companies emerge from places like London, Paris, Berlin, the Nordic region and beyond —SoundCloud, Spotify, Supercell and many others.” IrisNext Announced : 2015 Fund size: $329M “The goal of this new fund, named IrisNext, is to become one of Europe’s leading venture capital funds through funding from major international groups of French, German and international origins, as well as from institutional investors” Deutsche Telekom (DTCP) Announced : 2014 Fund size: $275M “DTCP will support Deutsche Telekom’s strategy as an external innovation engine through investments in venture capital, with a special focus on Germany’s exciting and growing start-up scene.” Non-European European Supported by Iris Capital & Capnamic “The corporates are waking up to the idea of digital disruption and entrepreneurship in general. The corporates we talk to through Founders Intelligence want their employees to be more entrepreneurial and to work much more closely with entrepreneurs” Brent Hoberman, Founders Forum November 2015#whatsnext4eutech

Capital is more readily available
in Europe… SLUSH & ATOMICO | The State of European Tech47 18% 8% "It is hard to raise capital" 18% 9% 58% 8% "It is the best time ever to raise capital" 47% 20% "Capital is more readily available today" 53% 22% "The capital environment is unchanged" "It is harder than ever to raise capital" 22% 3% 12% 2%1% Investors All Founders • 55% of entrepreneurs and 80% of investors believe that there’s more capital available than a few years ago • Investors are noticeably more positive on the current situation of capital availability • 51% of founders that have previously started a company think capital is now more readily available versus 40% of ﬁrst-time founders, suggesting repeat entrepreneurs may ﬁnd it easier to raise rounds Q: How has the experience of raising capital in Europe changed? Source: Slush & Atomico Survey November 2015#whatsnext4eutech

…but Europe still lacks capital
relative to the opportunity SLUSH & ATOMICO | The State of European Tech48 VC funds in the US raised 5.4 times more capital than their European counterparts 82 28 2.9x USEurope 76.1 14.0 5.4x USEurope The US produces 2.9x more $B+ companies than Europe… …but US VCs raised 5.4x more capital than European VCs Companies surpassing $B+ milestone by geography, Q1/13-Q2/15 Funds raised by VCs by region, US$B, Q1/13-Q2/15 Source: Atomico, DowJones VentureSource November 2015#whatsnext4eutech

This lack of capital is
most prominent at Series B & beyond… SLUSH & ATOMICO | The State of European Tech49 VC funds raised in Europe and US, by investment stage Funds raised by VCs, 2010-2014, US$B ~5x 13.0 Multi-stage 46.8 10.0 Later-stage (Series B+) 42.3 1.8 24.3 ~14x ~3x Early-stage (Seed/Series A) USEurope • The US produces 3x as many $B+ companies as Europe, but raises 5x as much capital • The relative availability of capital varies signiﬁcantly by stage. At the Series B stage and beyond there is a signiﬁcant diﬀerence in terms of available capital (14x US vs Europe) relative to the number of companies reaching $B+ valuations • As a result, there are relatively fewer local ﬁrms able to fund the increasing number of European winners on their path to global category leadership Source: Dow Jones VentureSource November 2015#whatsnext4eutech

…so leading US VCs are
active in Europe and ﬁlling the funding gap SLUSH & ATOMICO | The State of European Tech50 “While we don’t have an oﬃce in Europe we do have fourteen portfolio companies and every USV partner has at least two European portfolio companies. So we all travel to Europe regularly and we look at new investments.” Fred Wilson, Union Square Ventures VC Selected investments in Europe (SWE) (UK)(SWE) (GER) (UK)(GER) (SWE)(UK) (UK) (SWE) (GER)(SWE) Source: CrunchBase, avc.com (UK)(GER) (GER) November 2015#whatsnext4eutech

In their own words SLUSH
& ATOMICO | The State of European Tech51 Source: Atomico & Slush Interviews Petri Järvilehto, Seriously “It’s deﬁnitely a lot easier to build a global tech company than it was 6 or 7 years ago. Funding is the ﬁrst thing that is just completely diﬀerent to some years back. In Finland alone, you have several sources of pre-VC funding that enable you to get going, and then raising venture capital has become a lot more eﬃcient as well.” Petteri Koponen, Lifeline Ventures “It absolutely has become easier to raise funds as an investor over the past ﬁve years. A good track record is crucial for a VC investor when she is fundraising; we can see a huge diﬀerence between now and four years ago when we were raising our ﬁrst VC fund. Overall, there are more European VCs with a solid track record so it’s easier to raise funds.” Riccardo Zacconi, King “I think the investment landscape in Europe is dramatically diﬀerent. There is much more money in the market than a few years ago, but also much more competition.” Ilkka Paananen, Supercell “I’d say that today it’s easier to raise capital. Mostly because all top-tier investors have already done at least their ﬁrst investment into Northern Europe. So they’ve gone over that entry barrier, and it’s much easier after that.” November 2015#whatsnext4eutech

6. Europe’s Success Stories November
2015 Achievement unlocked: 10 $B+ companies in 2015, making a total of 35 since 2003 What’s next: companies valued in the tens and hundreds of billions #whatsnext4eutech

More hugely successful companies are
now coming from Europe SLUSH & ATOMICO | The State of European Tech53 # of European $B+ companies founded since 2003, by year ﬁrst surpassed $B+ milestone 2010 2012 2014 4 (+2) 35 (+10) 2015 YTD 1 (+1) 13 (+5) 2013 2 (+1) 2005 2011 25 (+12) 8 (+4) Source: Atomico, *2015 YTD is to 30 October 2015 Skype was the only $B+ company founded since 2003 from Europe until 2010 November 2015#whatsnext4eutech

Europe’s challenge is to build
the next generation of global winners SLUSH & ATOMICO | The State of European Tech57 Share of global $B+ companies and categorization of $B+ companies founded since 2003 The US and China have produced larger companies… …and are home to all $10B+ companies founded since 2003 Source: Atomico 53% 63% 15% 9% 23% 22% 5%10% Share of market cap created by $B+ companies Share of $B+ companies globally Europe China US Rest of World 94 25 25 19 11 13 8 7 10 7 7 Rest of World 24 4 1 Europe 35 2 China 52 125 US $3-5B $5-10B $10-50B $50B+ $1-3B 3 November 2015#whatsnext4eutech

Europe has laid the foundations
for a bright future SLUSH & ATOMICO | The State of European Tech59 Q: Are you more or less optimistic today about the future of European technology than 12 months ago? Very positive view shared by all respondent groups… …and the next generation is the most optimistic Source: Slush & Atomico Survey 8% 6% 39% 8% 32% Less More 55% 62% 53% 38% About the same AllInvestorsFounders 62% 35-44 18-2425-34 55% 75% 51% 45-54 51% 55+ Age group % of respondents more optimistic about the future than 12 months ago November 2015#whatsnext4eutech

Europe’s next generation will create
even more success stories SLUSH & ATOMICO | The State of European Tech60 European $B+ companies by year founded 8 15 11 1 2015-2017 ? ? 2006-2008 ? 2012-20142009-20112003-2005 Avg. time to $B+ (years) 6.3 4.6 3.0 ??? Source: Atomico 8.3 • Over the past decade, companies have taken on average 5.7 years to ﬁrst surpass the $B+ milestone • Given this lag, companies founded since 2011 will only start to reach their potential in the coming years • Europe’s “class” of 2011 onwards will produce even more global category leaders • In short, the best is yet to come from the new generation of startups originating from Europe’s maturing tech hubs November 2015#whatsnext4eutech

Europe is already building and
investing in the next generation of potential success stories SLUSH & ATOMICO | The State of European Tech61 Methodology: total funding >$10M, most recent round since 1 Jan 2015, HQ in Europe, ﬁnancing raised from one of the following: Accel Partners, Atomico, Balderton Capital, Creandum, Earlybird, Google Ventures, Index, Lakestar, Mosaic Ventures, Northzone Source: CrunchBase November 2015#whatsnext4eutech “Major cities in Europe have emerged as important tech hubs and I’m very excited about what the future holds. For example, London leads the way in terms of Fintech. In Stockholm, the success of Skype and Spotify have positively inﬂuenced many Swedish entrepreneurs. Rocket, in Germany, has become a source of execution-focused talent. And in Helsinki, incumbents like Nokia fed talent into Supercell and Rovio creating a leading hub for mobile gaming. The virtuous cycle is increasingly self perpetuating where the combination of top talent, strong exits and successful entrepreneurs re-investing in the ecosystem generates leading companies." Carolina Brochado, Atomico

European VCs will need to
keep pace with the scale of entrepreneurial ambition SLUSH & ATOMICO | The State of European Tech62 Source: Atomico & Slush Interviews Christian Hernandez, White Star Capital “I think there is a disconnect between the intellectual output of Europe and the ability of funders to understand that intellectual output. The UK has one of the largest outputs of artiﬁcial intelligence and machine learning PhDs through Edinburgh, Imperial, UCL & Cambridge. And while we all run around saying that we're looking for AI Machine Learning startups, how many of us are actually deep enough to be able to go head-to-head with a CTO on Neural Networks? I'd say, half a dozen, if that, and that's across all of Europe. So we rely on our network of contacts and friends to help educate us, but if we're supposed to be betting on world-disrupting technology, how do we as investors become more adept at understanding what world- disrupting technology is? What a great challenge to have!” Florian Meissner, EyeEm “We don't have that kind of craziness yet. This moonshot idea of say building the next car, or sending people to the moon with rockets. But, I think this will evolve, because we just need a couple of really successful outcomes. People have got to dream bigger. It's a natural evolution of ambition levels, which are evolving on a daily basis.” November 2015#whatsnext4eutech

The best time in history
to be a European technology entrepreneur SLUSH & ATOMICO | The State of European Tech63 36% 43% Strongly disagree I don’t know 17% 10% Disagree 11% 17% 12% 36% 3% 5% 14% 2% 3%2% 1% 27% Agree 46% 40% Strongly agree 27% 50%Founders Public sector Corporate employees Investors • Founders and investors have the most positive view on the current situation: 50% of investors and 40% of founders agree strongly • Repeat founders had a noticeably more positive view than ﬁrst-time founders • Employees of corporations and the public sector are positive, but not quite as much Statement: Now is the best time in history to be a technology entrepreneur in Europe Source: Slush & Atomico Survey November 2015#whatsnext4eutech

In their own words SLUSH
& ATOMICO | The State of European Tech65 Source: Atomico & Slush Interviews Ilkka Paananen, Supercell “It is easier to build a global technology company from Europe than six or seven years ago for a number of reasons: it is easier to raise money, it is cheaper to build and operate products and services thanks to innovations like cloud platforms and it is easier to get global distribution thanks to app stores and the Internet. And, very importantly, there are role models these days, people who have successfully built globally successful companies, who inspire others to do the same. “In other words, the importance of geographic location has decreased signiﬁcantly. And interestingly, we do have an advantage in Europe that has to do with geography. Europe is a fragmented home base with many languages, cultures, and small domestic markets. Because of this it seems to be more natural for Europeans to think global from day one. For example, no startup entrepreneur in Finland would ever build anything just for the local home market because it is simply so tiny. So we need to, and want to go global from day one. It feels natural for us. I don’t think it is the same for entrepreneurs who have larger home markets. “Over the next ten years there will be a lot more successful companies out of Europe. And I think that people will have stopped wondering about this rise of European tech, as it has become something of a norm. We won’t have the debates on European versus American technology entrepreneurship, and people will deﬁnitely have stopped questioning Europe’s role in global tech. I think people will take it for granted that all technology entrepreneurship is global by nature, including entrepreneurship in Europe.” November 2015#whatsnext4eutech

Final thoughts November 2015 Daniel
Ek, Spotify “Being an entrepreneur is not for the faint-hearted. It’s an insane emotional rollercoaster. Even at this stage, people say “You’re done, you’ve done the hard years, now you can relax.” That’s not how it works, there are still days that are incredibly tough. I think that’s life if you’re an entrepreneur and you’re constantly not satisﬁed with the status quo.” #whatsnext4eutech